January 13, 2019 (1409 words)
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Tech startups may start out with good intentions, but the process of gaining wealth and power comes with existential risks.
Tags: underdogs, batman, startups, meritocracy
This post is day 13 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.
A lot of my critical writing on the tech industry mentions the sheer inanity of the current system, and how grotesquely inefficient it is (especially when it comes to how tech startups are funded). For today’s blog post, I want to focus on one particular aspect of that inefficiency: what happens when startups grow.
I’m not going to use this space to explain how startup funding works - for that, check out Toxic VC and the marginal-dollar problem in WIRED or The Unicorn Hunters in Logic. Instead, this post is meant as a critique of a phenomenon that arises in the current system, which I see as sort of the pinnacle of capitalist logic (and all its associated flaws). If you’re looking for a spirited defense of venture capital or Silicon Valley-style “innovation”, look elsewhere; I personally think the tech industry is powerful enough, and wealthy enough, that it no longer needs defenders.
Other things I’ve written touching on this topic:
- Abolish Silicon Valley for Tribune (precursor to a book I’m writing with the same name)
- Beyond “Taming” the Tech Giants for New Socialist (originally delivered as a talk for the DECODE Project)
- Technological Development For The Many for New Socialist (originally delivered as a talk at John McDonnell’s State of the Economy conference in 2018)
- The Inevitability of the Gig Economy for New Socialist
The fact that tech startups use the rhetoric of “disruption” has been written about to death. It’s overused as a buzzword, and it’s often brandished merely to conceal a shallow and/or pointless business model. On the other hand, I do think there’s some merit to the concept. Because sometimes startups do begin with good intentions, and manage to build technology that solves societal or economic inefficiencies - sometimes “disrupting” industries that relied on those inefficiencies in the process. And as much as there are downsides to that in practice, there is some validity in it, too.
The relationship between startups & the incumbent industries they’re trying to “disrupt” has not been theorised enough, in my opinion. It makes me think of Gabriel Winant’s spectacular n+1 article reviewing Malcolm Harris’s book on millennials, Kids These Days, on the relationship between the younger and older generations:
If you kill your parents, you won’t hear their warnings, and then you’ll eventually just become them without realizing it. If you listen to them, you’ll become them on purpose. The question is how to become new and stay that way, how to be a stable point moving steadily from past into future without a neurotic relation to either—neither clinging nor leaping.
and
Generation is not actually just an identity. It’s a relationship: no children without parents, no millennials without boomers. And all of us should have noticed by now that our parents are starting to get old. This will impose new obligations on us and open up new opportunities.
In Gabriel’s article, these are intended as strategic prompts for the left. But they could feasibly apply to the tech industry as well, in a slightly twisted form.
When tech startups are founded, there is always an aura of youth and newness around them. The young/old dichotomy serves as a justification for their wealth: they are disrupting older, stagnant industries, which are often thought of as corrupt or just otherwise inefficient. It’s always about creative destruction, with the young disrupting the old.
And you know what? There is some merit to that narrative. Sometimes tech startups do genuinely offer better products and workflows than what came before them. Sometimes they do actually start out as the underdog, competing with an entrenched older corporation or industry in dire need of disruption.
The problem is when these underdogs start to grow older, and larger, and more powerful. They may have begun their journey with a critique of the powerful, but rarely (never?) does that critique contain a materialist analysis of why those powerful companies got to be the way they are. There’s no Foucauldian analysis of power, or Marxist understanding of class interests, in these startups’ pitch decks when they’re raising their seed round. The powerful (the big banks, or the US government, or hotel chains, or taxi companies) are the bad guys, and the scrappy startup founders are the good guys, and in their minds, it will stay that way forever.
This worldview is static, essentially. It doesn’t account for growth, which is ironic, given that the whole startup ethos is about growth. What happens when you grow out of being the underdog, and in the process amass enough power to dwarf your former enemies? What happens when you become big enough that someone decides they’re going to disrupt you?
Maybe we should think of tech startups’ ‘underdog’ mentality as not merely an identity, but a relationship to power. If your founding myth (and justification for your existence) has to do with criticising the powerful players in your industry, then you should be prepared for that myth to crumble when you yourself become the powerful one. Because no matter how laudable your original motives, they can only ever be considered in context, and that context shifts with every round you raise or new customer you acquire. To paraphrase a quote from The Dark Knight, you might find yourself becoming the villain.
Or, as WIRED Magazine put it about a year ago: Silicon Valley Techies Still Think They’re The Good Guys. They’re Not.
The obverse of the “disruption” perspective is the reality of its dark side. Rather than applauding startups for coming up with inventive technical solutions that can disrupt entire industries, we should instead recognise that any such technological innovation is too powerful to be trusted within the hands of a corporation - “a monstrous legal construct designed for the express purpose of annihilating all concerns but its own profit”, as Albert Burneko writes in a despairing but stunning piece about United Airlines. Startups are still corporations, and they will prioritise their concerns qua corporations even if it means limiting their potential impact on the world to the domain of banal, quotidian avarice.
So here are the achievements of Silicon Valley, in sum. Some boy geniuses figured out how to take a cut of every transaction any time someone wants to travel around a city (Uber, Lyft, Lime, Bird, etc). Or get food delivered (Uber Eats, Postmates, Deliveroo, Seamless, etc). Or listen to music (Spotify and Apple Music, mostly). Or fucking spend money on anything (Square, Stripe, Paypal).
And everyone’s just like okay with this? Didn’t all these founders initially talk about disrupting middlemen who were extracting extortionate rent from consumers? But it’s okay when tech startups do it?
The system we have now is terrible on all sorts of counts, and it’s not just because even the most promising startups will either die (usually not so heroically) or will become villains in their own way. What’s even more tragic is that the really promising startups are never created. The tech startups that could actually be useful to society - that are more than just unimaginative apps designed purely to facilitate returns to capital - are foreclosed, because the industry structurally incentivises startups according to how good they are at making rich people richer. And the most fundable founders in such a system are also rich enough that their main goal in life is to solve rich peoples’ problems. The startups we actually need don’t get funded, or even get past the ideation stage, because their potential founders are too busy working 3 shitty jobs in order to make rent in this hellscape of an economy.
This whole thing’s fucking awful. The only possible justification I can think of is the idea that this is the best we can do: that our current mode of production, however flawed, is better than any alternative. That sure, things aren’t so great, but there’s no way to make them better, so we should just accept what we have now.
Which is funny to me, because it sounds like the exact same attitude that suffused industries and companies that were subsequently disrupted by these same tech startups. There’s no alternative until, all of a sudden, there is an alternative - one that serves as a clear rejoinder to anyone who insisted on the inevitability of the status quo. That’s the kind of “disruption” we need.